“Robo-advisors faced their first big challenge with the bear market in the first quarter of 2020. They lost, and that is an ominous sign for the future of automated advice.
All robos employ a degree of active management. They deviate from the cap-weighted market portfolio through fund selection or sector allocation. As active managers, robo-performance can be fairly viewed only through a full market cycle. Nobody needs an active manager in a bull market; index returns are adequate. Active management shows its value in its ability to protect against adverse market conditions. The market downturn in the first quarter gave us that opportunity.” – Robert Huebscher, Advisor Perspectives
“…seven years of college down the drain.” – John “Bluto” Blutarsky, Animal House
The inspiration and credit for this article belongs to Emil Kalinowski and his recent publication The Silent Depression: Trundling Is the New Booming.
Most profound about Kalinowski’s piece is that it was published just eight days prior to the February 19 S&P 500 market peak. Mr. Kalinowski’s article highlights the same problem that we have been discussing for many months now. That issue is how the media, Wall Street’s “finest,” and Ph.D. economists misrepresent economic conditions.
Their economic euphemisms and overly optimistic expectations remind us of a Dylan Grice quote “Linguistic precision yields cognitive precision.” Or, put a little differently, linguistic imprecision yields stupidity.
In this piece we explore monetary policy and the role it plays in economic growth. Read More
“It’s strange what desire will make foolish people do..”
Where do financial markets go from here? Yesterday headlines were screaming US stocks are now positive for the year! Today it’s “Momentum stalls” as markets pause to consider just how high they’ve risen in the face of the US officially being in recession. The speed at which the 40% March crash has been reversed is “unprecedented”.
It’s not real.
We all know the rally and this market do not reflect any meaningful reality. Get used to it. This rally is not about value. It’s about day traders, get-rich-quick scams, FOMO, and, ultimately, who will be left holding the ticking parcel when it goes off… Read More
Billionaire investor Ron Baron believes there’s still plenty of room for growth for Elon Musk’s Tesla and SpaceX companies.
Baron said Tuesday morning on “Squawk Box” that he believes “there’s 10 times more to go” with Tesla. He also said SpaceX, a privately held company, will grow by a multiple of 20 in the next 10 years. He previously predicted similar growth for Tesla.
The Nasdaq-100 recently hit record highs and the S&P 500 is almost all the way back to its pre-coronavirus slump record.
Some market segments and the related exchange-traded funds are doing even better than those broader benchmarks. At the sector level, technology and health care maintain leadership perches and there are signs of life in some previously lagging sectors.
Those green shoots are important, but some ETFs, many of which have ties to oil, are getting absolutely drubbed in 2020. The 10 worst-performing non-leveraged ETFs this year are sporting losses ranging from around 44% to just over 72%. Many are a direct play on crude.
Here’s a trio that are getting crushed, but a couple are recently rebounding…CLICK for complete article